Is Debt a Four-Letter Word?

We've all heard the terrible stories about the evil bill collectors, and some of them are true. There are some collectors who break the law by calling in the middle of the night or threatening people, but there is another side to the story.

Rick Doane runs Sunrise Credit Services, and he knows what people say about bill collectors.

When I asked if he thinks people hate his industry, Doane told me, "I would say that that's not too strong of a word."

At parties, when he tells people what he does, Rick Doane says they routinely turn away from him.

"They tend to walk away pretty quick," he said.

And I'm not surprised, because his employees do bug people over the phone, saying things like:

"How close to $638 do you have at this point?"

"Do you have equity in your home?"

"You are telling me no, but you haven't tried!"

In response, people often curse them out, insult them and their families and even make jokes about their weight.

"Yelling and screaming like children," one collector remarked.

"We take abuse pretty consistently," Doane said.

Keeping Up Morale

To keep his collectors from quitting, Doane stages little celebrations to cheer them up. When one bill collector recoups a big payment, he announces the success to the rest of the group, and star collectors win prizes like a free tank of gas.

He has to do this to keep up morale, Doane said, because people hate them.

When I reminded Doane that there are debt collectors who call people at night and are abusive, he replied that "every industry has rogue people within their industry."

To make sure his workers don't do what those "rogue" bill collectors do, he, and many collection agencies, require workers to go through hours of training.

But even if they follow the law, bill collectors still have a nasty job to do, even though Doane said, "we do good."

Good? Well, yes, they actually do good.

Small businesses -- like a blinds and drapes store run by Preston Petty -- say they'd have to raise prices if bill collectors didn't get their slow-paying customers to pay.

"People who are conscientious and pay on time wind up paying a higher price because of the bad debts of those few who don't pay on time," explained Petty.

"We create money that goes back into the economy. That helps people," Doane told me.

'Stop the Stupid!'

And some people do really need that help. Radio host Dave Ramsey counsels debtors. He gives them tough love, because, he said, many are acting stupidly.

"You gotta stop the stupid! Because stupid attracts his other two brothers: desperate and broke!" said Ramsey.

He was once one of the stupid people, he said. Ramsey once had a successful real estate business, but he said he lost "everything [he] owned."

"I know what it feels like when people call us that are pounded and pushed and crushed," he explained.

Now Ramsey tells people who come to hear his seminars how he fell into debt and tries to teach others not to make the mistakes he made.

"We were bankrupt. It ripped my guts out," he said at one seminar.

Easy Credit

Part of the problem, Ramsey said, is the new world of easy credit, such as credit card offers that come in the mail.

This is a new temptation, said Eric Schurenberg of Money magazine.

"Think about how loans used to be extended," he said.

And he's right. There was a time when you'd have to go into a bank to borrow money, and face a loan officer you might even know. You would have to explain why you wanted it, and represent yourself as being able to pay it back.

"There was shame attached to not paying back your debts," explained Schurenberg.

But with the popularity of credit cards in the 1970s, things began to change.

But people do it anyway, and Rick Doane has to put his 400 bill collectors to work. And even that isn't a solution, because most of what is owed, is never paid.

"On average, about 20 percent of what is out there, we'll collect, as an industry," estimated Doane.

At the end of the day, Doane believes his industry does do some good.

" I am truly proud to be a collector," he said. "I truly believe there's a huge difference that we make. We get thank you letters, each and every day, from debtors who say, 'thank you, thank you for helping me through this.'"

It's All Based on Trust

The fact is America was built on debt. Business loans allowed entrepreneurs to create all the enterprises that make our lives better. Borrowing in the form of mortgages has allowed millions of Americans to realize their dream of owning a home.

But it's all based on trust. Trust that a borrower will pay the money back. When borrowers don't pay it back it makes it tougher for all of us to get that mortgage, finance the car or build a business. So the bill collectors do us all a favor. They help make the system work.